TEL and AML1 are critical regulators of normal hematopoiesis. Mice studies have confirmed that TEL plays a role in hematopoiesis by showing that in chimeric mice TEL-null ES cells do not contribute to the hematopoietic cell population in the bone marrow. Gene targeting studies in the mouse showed that AMLI-null murine embryos die in utero at day 12 for failure to develop liver hematopoiesis. Because of their role in directing hematopoietic differentiation, TEL and AML1 are the most frequently mutated genes in lymphoblastic and myeloid leukemia. The precise roles of TEL and AML1 in hematopoietic development and differentiation are not known. TEL is a nuclear protein with homology to members of the ETS protein family and is expressed virtually in all tissues. By analogy to other ETS protein, it is thought that TEL is a DNA-binding transcription factor. AML1 is a DNA-binding transcription factor expressed in many tissues. It is proposed that AML1 specifically regulates hematopoietic promoters by interaction with lineage-specific factors. Both TEL and AML1 are often rearranged, leading to block of hematopoietic differentiation and leukemia. One of the most frequent rearrangements of TEL and AML1 results in the fusion protein TEL/AML1 that contains the entire AML1 fused to the proximal region of TEL. TEL/AML1 blocks B-cell differentiation at the pre-B stage and is the most frequent genetic lesion in children cancer. Recent advances in our work show that both TEL and AML1 are post-translationally modified by covalent addition of acetyl and SUMO-1 groups. We found that these modifications are cell cycle dependent and erroneously occur or fail to occur in the fusion protein TEL/AML1. Furthermore, we have determined that whereas TEL and AML1 interact with several transcription co-activators and corepressors that are necessary for promoter regulation, TEL/AML1 has lost the ability to interact with the co-activators. Based on this background, we propose that during normal hematopoiesis, TEL and AML1 are modified and associate with several factors leading to the assembly of multiprotein complexes that regulate lineage-specific hematopoietic promoters. We further propose that the fusion protein TEL/AML1 has lost the ability to interact with co-activators, leading to repression of genes necessary for lymphopoiesis. In this application, we propose several biochemical and in vivo assays to better understand the role of post-translational modification in the regulation of AMLl-dependent hematopoietic genes and the mechanism by which the fusion protein TEL/AML1 blocks B-cell maturation.